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Union of India v. M/s. Susaka Pvt. Ltd. & Ors.

Civil Appeal · 2017 INSC 1203Decided 8 Dec 2017
Civil Appeal No. 8530 of 2009
Justice Abhay Manohar Sapre · Justice Navin Sinha

Background

Indian Railways (Union of India) had awarded a repair works contract to respondent Susaka Pvt. Ltd. in 1994; disputes over payment went to arbitration, and a three-member Arbitral Tribunal awarded the respondent roughly Rs. 27.6 lakh including interest on various claims. A single judge of the Bombay High Court, hearing Railways' challenge under Section 34 of the Arbitration Act, made only minor modifications to the interest awarded on two specific claims and otherwise upheld the award; the respondent appealed that limited modification, and Railways did not cross-appeal the parts it had lost. The Division Bench then allowed the respondent's appeal and restored the award in full.

Decision Breakdown

Before the Supreme Court, Railways argued for the first time that a contract clause (13(3) of the General Conditions of Contract) barred any interest from being awarded at all. The Court rejected this, holding that having never raised this argument before the Arbitral Tribunal, the Single Judge, or the Division Bench, and having actually consented earlier to let the Tribunal decide interest, Railways had waived the point and could not raise it for the first time in the Supreme Court. The Court also noted that because Railways had never cross-appealed the Single Judge's substantial dismissal of its Section 34 objections, that part of the ruling had already become final independently. The Court further held, on the merits, that awarding interest on arbitrable claims is not inherently illegal, and invoked an old judicial observation that the State should deal with citizens honestly rather than relying on unraised technical pleas. The appeal was dismissed.

Lesson Learnt

A legal objection not raised at the earliest available stage, before the arbitrator, then before each reviewing court, generally cannot be raised for the first time in the Supreme Court; parties (including government bodies) must take their objections when they have the chance, or risk losing them through waiver.

Official source (sci.gov.in)View Judgment (PDF)

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